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Beyond Earnings. Applying the HOLT CFROI and Economic Profit Framework

  • ID: 4409787
  • Book
  • April 2018
  • 416 Pages
  • John Wiley and Sons Ltd
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"Holland and Matthews show why successful investors (and corporate managers as well) must focus on cash flow metrics in analyzing and valuing a business. This book is essential reading for anyone who wants to make successful investment decisions."
William Priest, CEO, and Steven Bleiberg, Managing Director, Epoch Investment Partners, authors of Winning at Active Management: The Essential Roles of Culture, Philosophy, and Technology

"Holland and Matthews do an amazing job articulating the theoretical underpinnings of valuation and value creation without limiting or compromising the practical application of the DCF methodology."
Frank Ieraci, Head of Active Fundamental Equities, Canada Pension Plan Investment Board

"Beyond Earnings belongs on the desk of every investor, corporate manager, and student of financial markets who seriously want to understand how companies create value for their shareholders and other stakeholders of corporations."
Hon. Professor Dr. Jan Viebig, Goethe University Frankfurt; editor and author of Equity Valuation: Models from Leading Investment Banks

"If the ′science′ of Economics can be described as often ′dismal′ then the discipline of Equity Valuation could easily be described as mostly ′amateurish′. Holland and Matthews have done more than anyone to help professionalize the investment industry′s approach to financial analysis and business valuation."
Mark Ferguson, Founding Partner and Co–Chief Investment Officer, Generation Investment Management

"Beyond Earnings brings erudition and sense to equity valuation and financial performance analysis, and then links them clearly to investment decision making."
Michael O′Sullivan, Chief Investment Officer, International Wealth Management, Credit Suisse

"Value conscious executives from listed corporates will find the time invested in studying Beyond Earnings immensely rewarding."
Patrice Lambert – de Diesbach, Head of Investor Relations, Orange Group

"Most investors fall victim to extrapolation. Holland and Matthews demonstrate in their must–read book that the value of a business is not only driven by its rate of growth and level of profitability, but also by its rate of profitability decay."
Roger Merz, Head of Global Equities, Vontobel Asset Management

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Introduction xix

The Pricing Puzzle: Foundational HOLT Concept and a Key to Better Valuation xix

Overview of Book Chapters xxvi

Who Are We and What Do We Hope to Achieve xxviii

I Financial Performance Assessment

1 Never Forget the Golden Rule: Pursue Strategies with Positive NPV 3

2 The Flying Trapeze of Performance Metrics 31

3 Accounting to Cash Flow Return on Investment 57

II Discounted Cash Flow and Economic Profit Valuation

4 What′s ItWorth? Valuing the Firm 113

5 Quantifying the Value and Risk of a Company′s CAP 151

6 HOLT Economic Profit 191

7 Risk, Reward, and the HOLT Discount Rate 217

III Value Driver Forecasting

8 The Competitive Life–Cycle of Corporate Evolution 257

9 The Persistence of Corporate Profitability 281

10 Forecasting Growth 303

11 Evaluating Market Expectations 321

12 Closing Thoughts 359

Index 363

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David A. Holland
Bryant A. Matthews
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